Explaining the dynamics of stagnation: An empirical examination of the North, Wallis and Weingast approach

Richard Bluhm, Denis de Crombrugghe () and Adam Szirmai
Additional contact information
Denis de Crombrugghe: UNU-MERIT / MGSOG, and School of Business and Economics, Maastricht University

No 2012-040, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: This paper analyzes periods of economic stagnation in a panel of countries. We test if stagnation episodes are predicted by institutional factors and external/internal shocks, as is implied by recent theoretical contributions, and compare the impacts of these variables with those of traditional macroeconomic variables. We examine the determinants of stagnation episodes using multivariate dynamic linear models, fixed-effects logit models, and dynamic random effects probit models. In addition, we analyze whether the included variables have different impacts on the onset of a stagnation episode than on its continuation. We find that inflation, negative regime changes, real exchange rate undervaluation, financial openness, and trade openness explain the incidence of stagnation spells. Only in the case of trade openness, there is robust evidence of a differential impact; it reduces the probability of falling into a stagnation spell, but has a weaker effect within a spell. All models account for unobserved heterogeneity and exhibit a moderate degree of positive state-dependence.

Keywords: growth episodes; stagnation; institutions; dynamic panel data (search for similar items in EconPapers)
JEL-codes: C25 O11 O43 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://unu-merit.nl/publications/wppdf/2012/wp2012-040.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2012040

Access Statistics for this paper

More papers in MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) Contact information at EDIRC.
Bibliographic data for series maintained by Ad Notten ( this e-mail address is bad, please contact ).